Supply Chain: Retooling the Tool Shop

Less than two years ago, the inner workings of the privately held Goldman Industrial Group, a collection of sleepy machine tool companies located in New England, bore an odd resemblance to a recent perplexing TV trend.

Less than two years ago, the inner workings of the privately held Goldman Industrial Group, a collection of sleepy machine tool companies located in New England, bore an odd resemblance to a recent perplexing TV trend. The 100-year-old industrial consortium, like several prime-time sitcoms, was stuck in the 1970s. You could see this from the absence of desktop PCs to the hand-rendered engineering drawings the company still used to make the metal-cutting machine tools sold to companies such as DaimlerChrysler for building mufflers and transmissions.

Goldman's backwardness wasn't rooted in any romantic nostalgia but rather in a management entrenched in old ways of doing business. And with the company's fortunes shrinking, that management didn't see the value in investing in technology.

"The truth is, this company didn't deserve to be still in business," says Jack Lowry, Goldman's vice president of information technology, who was brought in to pull the firm into the 21st century. Basic tools such as e-mail and a collaboration program were nowhere to be seen as late as 1999. In fact, Goldman nearly lost Ford Motor Co., one of its biggest customers, about 18 months ago, because it couldn't process orders and payments online.

That wake-up call, along with the discovery of an order from 1972 that was placed but never filled, was what Lowry used to launch an internal revamping campaign. Goldman needed to modernize its supply-side systems to interact with suppliers and customers, as well as those used to design, build, and bill for the machine tools it makes. This was a matter of survival. At its peak in the mid-1970s, the company employed 15,000 people. Today it has 300 employees.

Once Lowry sounded the charge, Goldman began working with IBM Global Services on a comprehensive supply-chain project, using manufacturing and ordering applications from Baan, a computer-aided design and manufacturing system for product design from Dassault Systems, and Lotus Notes for communications.

The system went live in April, after a superfast overhaul that took several months, compared with just a few years ago when a similar changeover would have taken two years and required proprietary applications, specialized hardware, and costly online access. Both Lowry and IBM's general manager of product life cycle management, Ed Petrozelli, attributed this speed to a combination of inexpensive hardware, ubiquitous Internet access, software standards, and easier application integration.

But the Goldman picture isn't entirely rosy. For starters, the project has already cost upwards of $4 million, and there are still scores of issues to be addressed. For example, the chasm between how employees do their jobs and the world of always-on e-business is huge. So the company has invested untold hours to train employees (whose average age is 55) in such rudimentary skills as using Microsoft Windows and sending e-mail.

That task pales in comparison with what Goldman faces outside. Convincing customers and suppliers that it is now a cutting-edge Internet-enabled business is an uphill battle. "We have some credibility issues," says Lowry. "Customers have trouble believing we've done this in less than a year."

That's why Lowry has been hitting the stump since the system went live. He has been traveling nonstop to promote the company's ability to process orders in one week, as opposed to the 3 to 4 months it would have taken previously, and to make public its goal of building and shipping machines in 5 months instead of 12.

His most important message is that Goldman is ready and willing to work with customers and suppliers onlinewhich hasn't been easy. "We just need one customer to take a chance with us," says Lowry.

Company management isn't discouraged. The company has made up for lost time and is now prepared for the automotive and aerospace industries to operate in the same way Michael Dell's build-to-order system does. That will mean that every company involved, even tangentially, in building cars and planes must be ready, wired, and able.